INVESTMENT IN BEEF INDUSTRY: MARKET RISK’S IMPACTS IN THE DETERMINATION OF THE BUSINESS’S VALUE

Abstract

One of the major goals of the financial management is to create value to shareholders through decisions that could maximize the value of the company. In this context, the investment’s decisions have been gaining importance in the academic and business environments due to its importance in the value creation. In investments where the risk level is considerably high, it is necessary the knowledge of the risk’s propulsive elements and theirs impact on a business’s value determination. Further more, it is necessary to analyze if there are possibilities for managers to interact with these risks through acquiring some kind of hedge that minimize future losses; suggesting that this active risk management can add value to the business by bringing perceived benefits. In this context, this study aims to analyze, through study case’s method, a beef industry investment, taking into account the factor’s risk impacts on a business’s value determination. The results show that due the high volatility level of the factors that compound the project’s cash flow, using Net Present Value’s complementary methodologies, it was possible to analyze the value business’s sensitiveness to these factors, and suggest that an hedging strategy can be viability in these cases for purpose of assuring the business value.